Measure For Success

by Jack Loechner, Apr 23, 2012, 10:00 AM

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According to new Whitepaper by the e-tailing group and Baynote, among surveyed merchants rating their top merchandising and navigational tactics for customer retention, evaluating analytics to see what works topped the list with 93% of retailers recording a top-2 score (most important/somewhat important). In fact, 61% rated it as “most important,” sending a clear message about the mission critical nature of “Measurements: to understand how merchants are thinking about metrics today, and futuristically.”

Top merchandising and Navigational Tactics Needed for Customer Retention
Tactic	% of Respondents Rating Most/Somewhat Important
Analytics to see what works	93%
Pricing or promotional strategies	81
Site redesign or enhancements	79
Easier online search relevance/options	79
Right in-stock assortment	76
Email on pre-established frequency	76
Usability testing	71
Rich media	64
Editorial, expert reviews, user content	62
Elevated brand differentiation	54
Social media elevation	44
Source: e-tailing group 2012 Merchant Survey, April 2012

The whitepaper, “Metrics Therapy– Details, Dashboards and Diligence.”  released on 4/23 by eTailing/Baynote Metrics, belies a “brief” Research Brief, but perhaps a glance at some relevant findings and an “almost” TOC will lead interested readers to link to additional detail found in the complete report.

Most merchants struggle to maintain the right measurements to drive business, including having ample resources to review statistics in the detail necessary for wise decision-making, says the introduction. As devices and social dynamics accelerate, metrics are emerging to meet the needs of marketers. As cross-channel selling plays a more integral role for retailers and tracking across touch-points becomes even more crucial, this topic is explored in the study. Taking a holistic view of the numbers and one’s customers will be imperative as competition remains fierce and consumers continually demand more in their shopping experiences, says the report.

The study addresses the most important metrics for running a business. Five key areas emerge, with suggested subsets, with “profit” the one universally constant across channels, making it the weightiest metric.

Key Business Measurement Needs
Business Category	Metric Subsets
Business	Profitability, EBIDTA, Margin (gross/product), Year/year performance, Net Operating Income
Channel	Traffic, Visitors, Conversion, Revenue, AOV, Items per order, Customer Satisfaction, Performance by trading area
Marketing	Customer acquisition cost, List size, Traffic source, ROI on marketing programs, Sales per email, Engagement, B2C: # of new customers, B2B: Active accounts, Retention, # of new accounts
Merchandising	Inventory and turn, Top sellers, Laggards, Performance by brand
Operational	Load time
Source: e-tailing group 2012 Merchant Survey, April 2012

Conversion continues to get significant attention within business units and among senior management as this singular number serves as a critical directional indicator. Beginning with insights from the Annual Merchant Survey, 52% of merchants are seeing conversion in the 1-3% range. Relative to 2011, these results indicate that somewhat lower conversion rates are being seen across-the-board.

Experienced Conversion Rates Among Survey Respondents (% of Respondents)
Conversion Rate	% of Respondents
0 to <1	7%
1.0-2.9	52
3.0-4.9	15
5.0-7.9	15
8.0-20.0	6
>20%	1
Don’t know	4
Source: e-tailing group 2012 Merchant Survey, April 2012

When asking over the course of the past year (2011), “How have the following key metrics been tracking,” 60% of participating merchants reported somewhat/significant increases in conversion. Similar stories throughout the interviews were found as merchants continue to refine the customer experience and drive more qualified traffic to the site, where positive results are forthcoming.

Key Metrics Tracked in 2011 (Significantly/Somewhat Increased; % of respondents)
Metric Tracked	Increase Trend (% of Respondents)
Revenue	86%
Traffic to site	81
Average order size	65
Conversion	60
Units per order	47
Source: e-tailing group 2012 Merchant Survey, April 2012

The report expands on understanding these metrics in the context of individual businesses:

• Shifting Priorities Alter Conversion Numbers
• Promotions and Profitability Goals Impact Conversion Numbers
• Mobile Wreaks Havoc on Numbers
• The Traffic Factor - Many Ways to Read
• Assortment Challenges
• Focus on the Customer Experience
• Conversion Influencers
• The value of testing
• Dynamic Merchandising Delivers Desired Conversion
• Accelerated Promotions
• New Warrants Attention and Feeds Desire
• Assortment’s Role in Elevating Conversion
• Personalization/Segmentation
• Assessing the Role of AOV

The pace-of-change requires retailers to deliver on a real-time basis where end-of-month numbers do not provide sufficient lead time to adapt and meet the concerns of connected customers. Additionally as channels and devices proliferate, increased measurement complexity grows exponentially. Based on these evolving circumstances, along with retailers’ desire for a more holistic view of their business and their customers, a brief discussion of mobile, social and cross-channel dynamics plus their supporting metrics is in order.

Generally, skepticism and many contradictions surround social for retailers where learning and waiting best describes merchant sentiment. Efforts center on testing but most reported traffic does not result in sales, therefore metrics have been less of a focus to date. Some merchants do believe that social may drive branding so understanding engagement has drawn attention, despite being difficult to measure. When a product or brand goes viral the impact is clearly evident but standard measurements are not employed. Retailers might have tried to compare the results, but wisely view it as a different way of managing information, more along the lines of a publicity or public relations brand-play.

Means For Measuring Social Media Success (% of Respondents Using)
	% of Respondents
Measurements Used	2012	2011
Number of Facebook fans	90%	78%
Number of Twitter followers	66	61
Click-through rates from social media	58	53
Growth rate Y-O-Y for KPIs	50	34
Number of YouTube views	46	40
Sales from social networks	41	47
Improved SEO	37	39
PR and media exposure	35	30
Video sharing rate	13	9
None, unsure	1	5
Source: e-tailing group 2012 Merchant Survey, April 2012

The ultimate situation for retailers is to have a 360-degree view of the customer with a goal of comprehending both interactions and transactions across all touch points, says the report. Contact strategies are under considerable scrutiny as retailers seek to understand the most cost effective ways to reach their customers and drive conversion.

Techniques Used to Measure Customer Centric Cross-Channel Behavior (% of Respondents; Multiple Response OK)
Measurement	% of Respondents
Anecdotal feedback from customers	49%
Lifetime value analysis	44
Loyalty and other CRM programs	33
Cross-channel customer surveys	29
RFM data	29
Don’t measure/don’t know	22
Source: e-tailing group 2012 Merchant Survey, April 2012

Each retailer has a unique approach for securing and sharing metrics within their organization, and these tactics can readily be adapted within any organization, says the report. As one technology manufacturer contributed, “Establishing shared goals across the organization versus a more siloed mentality is a requirement for effective analysis.”

The report concludes by detailing a suggested outline, or “playbook,” to assist the merchandising community in planning  metric measurement. To make sense of the insights and the anecdotes shared by the retail community, a playbook for embracing metrics was constructed that is meant to inspire any merchant to revisit their vision.

• Align goals
• Run company like it’s small
• Meet reguarly: the monday meeting and more
• Standardize definitions prior to analysis
• Focus on the action needed by moving beyond the numbers
• Educate internally
• Provide holistic view of information
• Invest in data warehouses
• Dialogue and discuss

To download the complete white paper and a free copy of “A Merchant’s Metric Playbook” please visit here.  Or, go here to register for the “Metrics Therapy for Merchants” on Wednesday, April 25^th, go here. You can also find an InfoGraphic here.

 

 

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